MCFE
McAfee Corp.
$25.99
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Fair Value
Trading 20.5% below fair value
You pay
$25.99
Bear
$27.36
Fair
$32.68
Bull
$38.00
Bear
$27.36
+5.3%
$1.52 × 18x P/E
Fair
$32.68
+25.7%
$1.52 × 22x P/E
Bull
$38.00
+46.2%
$1.52 × 25x P/E
Adjust Assumptions
21.5x
1.52$
Key Value Driver
Normalized P/E multiple (22x base case)
Implied Market Multiple
17.1x
Summary
Applying a 22x P/E to adjusted EPS of $1.52, the base-case value is $32.68 per share.
Warnings
The company pays out 319% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples